740.5/9–1851: Telegram

The United States Delegation at the Seventh Session of the North Atlantic Council to the Acting Secretary of State1

Secto 13. ToISA. Report on Mon afternoon mtg, continuation morning discussion Item IV, Beaulieu made remarks on FEB report re proposals to correct inequality of def burden; suggested FEB be invited complete its report with additional info re defense budgets required for implementation of commitments; stated FEB interim report tries to establish basis for distribution of burden; pointed out that US-Canadian econ power has doubled since 1938 and Eur increased by 40 percent; pointed out lack of raw materials; lack of machine tools, deterioration in B/P and increased prices; coordinated action necessary to rectify. If US econ aid below anticipated level as indicated, it wld cause some changes in Eur plans. No simple magic formula cld be devised for burden-sharing but principle of productivity cld be applied within limits. Requested NAC approve FEB analysis; requested more info on def programs and approval FEB program for further work.

Spofford made fol comments CD progress report: Deputies made progress in many fields; difficulties encountered (as in infrastructure) [Page 668] have been due in part to legal and admin practices but solution wld and must be found; glad to hear emphasis delegates placed on exchange of views; closer coordination between treaty agencies required; efforts needed bring balance between assets and requirements; greatest achievement of CD is of solidarity, unity of purpose, mutual confidence and trust.

Bidault stated Fr Govt thinks reports set forth excellently fundamental problem now before NATO, that of determining relations between mil needs and financial means; stressed urgent need for balance sheet; supported Bradley suggestion that intelligence appreciation be given at Rome.

Van Houtte (Belgium) stated only thru coordinated action can we bring about increased production; full utility of US-Canadian aid can best be achieved thru multilateral action; pointed up Bel’s pre-financing scheme to solve DPB monetary problem; def budgets to be considered in FEB as only those portions of the def budgets which go to carrying out the MTDP.

Pella2 (Ital) pointed out large part of available production and manpower capacity was in Italy and wished ways and means wld be found to utilize this lest potential source of strength become weakness; favorably impressed with US decision to use off-shore procurements; FEB report was first step in effort to bring equilibrium and urged rapid conclusion of this work; wished FEB not only consider budgetary aspects of the problem but also take acct of countries available resources.

Abbott (Canada) stated it was Canada’s hope that reports wld bring out facts upon which govts can decide on political basis fair distribution of burden; hoped that then wld be no agreement by experts as to burden-sharing as this was matter for political determination by govts.

Van den Brink3 (Neth) pointed out all countries know their fair part and do not like to see pressures brought to bear to do more; stressed Neth terrifically exposed world trade conditions; reaffirmed views that it ready to do fair share.

Kristensen of Den attacked principles underlying burden-sharing formula; stated def expenditures for this exercise shld be restricted to NATO costs; that NAT income must be adjusted to acct for unused and undeveloped resources as it is future we are interested in, not past; requested that FEB study impact on countries if more required; sighted deteriorating B/P and inflationary trends; launched into Den position on East-West trade stating that West derived more advantage from Eastern trade than disadvantages.

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Gaitskell (UK) stressed need for making distinction between paper plans and plans of action and stated UK plan was latter; real problem is not financial but econ; stressed need for closer collaboration between FEB and DPB; UK like Den lives by trade; UK will do everything increase coal exports; be mistake to assume we can increase defense efforts, standard living and still maintain favorable B/P and have no inflation; if milit situation is so dangerous then we must simply fill mil requirements by revising out econ policies and put them on war footing.

Mayer of Fr said we must never lose sight of two hypotheses as both being equally probable though contradictory (1) sudden attack in near future and (2) long period of cold war with its intense mil preparations; pointed out Fr’s poor financial-econ status due to shortages and increased prices of resources and US reduced econ aid.4

Costa Leite (Portugal) pointed out great disparity of resources among countries stating that formula for determining burden has limited significance; stressed fact that Portugal is but small poor agric country but that she was ready to make max effort.

Brofoss stated Nor had made many sacrifiices and was confronted with inflationary problems and requested that FEB be invited study this problem.

Acheson restated US position re East-West trade.5 Foster stated that US was confident that countries can get job done; urged that consideration be given to reduce traffic barriers; gave comparative figures between Western and Soviet bloc production capacity and pointed out that speedy effective high-level conversion and mobilization of this preponderance of resource will mean ready mil power. Snyder restated that mil effort can be achieved with maintenance of econ stability and pointed out that inflationary trends were not restricted to Eur area. Pace reassured Council of US desire to coordinate US aid with Eur production and that US planned to go forward with substantial off-shore procurement.

Van Zeeland proposed that deputies prepare paper on exchange of views for future meeting in order focus proposals and suggestions. Acheson supported.

Council launched into item V. Acheson and Pace set forth advantages to be gained by NATO with adherence of Greece and Turkey to Pact and gave reasons for proposed command org of Middle East. Morrison fol with support for full membership; Schuman and Stikker also supported US proposal but called attention to fact that their parliaments had to ratify. Other dels to be heard from tomorrow.

  1. Repeated to The Hague, Paris, Luxembourg, Oslo, Copenhagen, London, Rome, Brussels, Frankfurt, Lisbon, and Reykjavik.
  2. According to the United States minutes of this meeting (US MIN–4), this statement was made by the Italian Minister of Defense, Pacciardi, rather than by Pella (Conference files, lot 59 D 95, CF 93).
  3. According to the minutes cited above, this statement was made by the Netherlands Minister of Finance, Lieftinck.
  4. According to the minutes cited above, a brief recess followed Mayer’s remarks. Costa Leite resumed the discussion when the evening meeting opened at 6:10 p. m.
  5. For documentation concerning the interest of the United States in East-West trade, see vol. i, p. 993 ff.